CONTENIDO DE LA REALIDAD MORAL DE LA GUERRA

ENFOQUE GENERAL

2. MICHAEL WALZER Y LA MORAL EN LA GUERRA

2.2. LA REALIDAD MORAL DE LA GUERRA

2.2.1. CONTENIDO DE LA REALIDAD MORAL DE LA GUERRA

Another thing to keep an eye out for is a big swing in tick. Especially when tick reaches the extremes of the tick profile.

Looking again at the last couple charts you can see wild swings in tick just after 14:00, just before 15:15 and the high made at 15:45.

On the mini dow chart these all turned out to be important turning points for the day.

The important thing to be aware of again is the trend of the market. If you have an up day big swings in the direction of the trend may be ok to take but swings in the opposite direction may really hurt you. But these could be good points to take profits if you’re trading short term.

On days where the market is in a trading range you should be on alert for big swings in tick on both

extremes.

The next couple charts shows some big swings in tick

The one at number 3 ends up being of shorter term but is an important reference point for the one at 4 where the market begins an extended move up.

On this next chart we will look at an extreme that was created at the same time as we had a strong reversal in the tick. The blue horizontal box indicates the area of the selling extreme, at the same time there was a strong reversal in the tick at the red box marked #2.

A strong reversal in the tick at the red-boxed area #4 started the market move back up. In the red-circled area the market stops and pulls back when it hits the blue boxed extreme level. Even when the market pulls back and moves sideways for 4 bars the blue line continues higher with momentum increasing to the upside.

We get our answer quickly as on the second attempt the market quickly moves through this high. At the same time it also takes out the previous extreme indicated by the green box. This green box extreme was also was also confirmed by a big swing in tick to the down side at point 1.

Looking at the area circled in blue you can see that the green-boxed area extreme now acts as support.

Momentum is still to the upside. The blue line is rising and acting as support for the market. Another

excellent buy opportunity.

The big swings in tick at the extremes of the tick profile can signal the trader some very important reference points as they are happening.

The next couple charts show another situation where you could have used the big swing in tick to lock in your profits.

As the tick chart shows there was a big swing in the tick around 14:30. Tick dips below –800 then a swing up of over 1,000 ticks within 4 minutes.

On the bar chart the horizontal blue line could have been a common place for a stop. Waiting for this stop to be taken out would have taken awhile and you would have made even less on your trade.

These next 2 charts show more big swings in tick that proved to be important points on the 2-minute chart.

Looking at the past few charts shows how important the big swings in tick can be when you are trading short term.

You want to see tick go to one of the extremes then reverse by 800 to 1,000 ticks. Looking at the chart on the previous page you can see how the big tick

reversal at 15:30 would of allowed you to lock in profits before the sharp rally began.

These tick reversals can be very important especially if you are trading the 1 and 2 minute charts and

trading from a short-term perspective. This will often allow you to lock in profits, giving you an opportunity to take advantage of the next setup.

When you bring in other information like momentum or the trend of the trin you could even use shorter swings in the tick when they are in the direction of the trend. Even a 400 or 600 swing in the tick could be a good opportunity to go with the trend.

Trin

Trin is a little more complicated then tick. Also known as the Short Term Trading Index it was developed by Richard Arms. Trin is calculated using the ratio or advancing stocks over declining stocks divided by the ratio of volume of advancing stocks over volume for declining stocks.

The formula being:

Advancing Stocks/Declining Stocks Advancing Volume/Declining Volume

Lets look at an example and say there where 1000 stocks advancing and 1000 declining and volume on advancing stocks being 5000 and volume on declining stocks being 5000

1000 / 1000 1 =1 5000 / 5000 1

A ratio of 1 indicates a balanced market. The ratio of volume is the same as the ratio of advancing and declining stocks. Now lets look at it when volume is heavier in the declining stocks:

1000 / 1000 1 =1.66 3000 / 5000 .6

Ratio’s over 1 indicates a selling imbalance. In this case advancing and declining stocks where equal but volume was heavier in the decliners.

1200 / 800 1.5 = .6 5000 / 2000 2.5

Ratio under 1 indicates a buying imbalance.

Advancing stocks out numbered decliners and volume was also heavier in advancing stocks.

900 / 1100 .82 =. 62 4000 / 3000 1.33

In the above case decliners out numbered advancers but volume is heavier in the advancing stocks so we end up with a bullish ratio.

When it comes to trin we will be looking at the ratio and the trend of the ratio. If the ratio is 1 it means the market is balanced and volume is coming in equally to advancing stocks and declining stocks. For the

market to be bullish we would like to see the ratio at about .80 or lower. For the market to be bearish we want to see the ratio to be 1.20 or higher.

Most charting services will chart the trin like shown in the chart below. If the trend is down that means it is bullish and if the trend is up the market is bearish.

There is software that will scale it the other way around so that it will be visually correct. When it is trending up the market is bullish and when it is

trending down the market is bearish. Make sure you know what scale you are dealing with before you use trin. In the samples we will look at we will use the method shown on the chart above.

It usually takes the first 30 minutes for the market to settle down so lets say the reading after the first 30 minutes is .80. That would tell us that the market is bullish according to volume as money is flowing into the advancing issues.

From that point on we look at the number but also the trend of the trin. If the trin continues to hold at .80 that means that volume is still imbalanced to the buy side.

If the trend of the trin starts to move lower that would mean the volume is increasing in the advancing

stocks making conditions even more bullish. When the trend of the trin starts to move up in the market it indicates that there has been a change in the ratio.

But that is where it starts to get tricky. The further the market gets from that balanced 1 ratio the more

volatile the ratio of the trin will get.

As an example lets say the market has been very bullish and trin has trended down to a ratio of .60 by 11 in the morning. From 11 on to noontime volume is still bullish but during this time it is coming in at a ratio of .80. This would cause the trin trend to move up toward the .80 level. Trin is trending up but it is still bullish. For trin to turn bearish from the .60 level you would want to see it move up sharply to give you

confidence that selling is strong.

And that’s using trin for day trading short term with for example 1, 2, or 3-minute charts. Not to be confused with traders that use the extreme readings as an

overbought or oversold indicator.

Another important use of trin is to confirm a trade.

Once you buy you want to see the trin either hold or move lower confirming your trade. On a sell you want to see trin hold or move higher.

For example you get a sell signal and trin is at 1.20.

Once in the trade the market moves lower and trin remains at 1.20. In this case even though the trin trend is moving sideways the market is still bearish.

For trin to remain at 1.20 the volume in the market still has to be coming in at that ratio to the downside for trin to remain at that level. Even after you entered your trade trin increases to 1.30 this was would signal the market is getting even more bearish.

The other thing you have to keep an eye on is where the market is in relation to yesterdays close. Since trin is calculated using advancing and declining issues this figure can seesaw back and forth if the day is

trading near the previous days close. This price action can really affect the trin numbers and you should wait for a clear direction before using trin.

If the market is trading a good distance above yesterdays you can use trin as a gauge for how

traders are responding to the higher prices. If trin is not bullish or even bearish that could be a very good indication that traders are not comfortable with the higher prices and a correction is in order.

Just the reverse would be true if the market is trading much lower. The market needs volume in the

direction it is going for it to continue.

Using a longer-term time frame like a 15 or 30-minute chart can give you a good handle on what is

happening for the day and which side of the market you should be looking to make trades on.

The emini markets like the S&P, Nasdaq, and Dow usually trend the best in the morning and afternoon.

Looking at a 30-minute trend chart can often signal which side of the market you should be looking to trade from for the afternoon trends.

The next chart is a 30-minute Emini S&P along with a 30-minute trin chart.

But according to the trin chart you would not have wanted to buy this break out. But you could have been ready to sell this market when the break to the upside failed and catch a good move down.

The 11^th was a good example of trin signaling trades to the buy side. In many ways this day was a mirror image of the 9^th. The market once again builds a range then a false break this time to the downside.

Even with this break trin is unable to even reach the .60 level. The break to the upside was no surprise and you could have easily caught this late afternoon trend to the upside.

You could have also watched for a swing in the tick at these points to confirm your trade with the trend.

When you look at days where trin spent most of the time between .80 and 1.20 with no real trend the market was very indecisive with a lot of whipsawing back and forth.

Knowing what Tick and Trin are doing can be invaluable when day trading the emini markets.

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